Western Banks Begin Withdrawal From Iraq Amid Crisis

Iraqi Banking News –

The western banks are reportedly pulling out senior staff from Iraq, and are also tightening controls on clients’ funds in wake of the escalating security concerns in the country.

British lender Standard Chartered has relocated the head of its Iraqi business, Gavin Wishart and another official to Dubai, from where they continue to manage operations, reported by The Financial Times.

While Wishart is regularly flying to the country from Dubai, the bank’s local staff in Baghdad branch has been working from home recently for security reasons.

StanCharted is claimed to have the biggest presence of any Western bank in Iraq following the opening of two branches in Baghdad and Erbil in November and December 2013.

The bank, which has 21 employees in Iraq, had originally planned to open a third branch in Basra by last month, but put the plan on hold due to the rapid advance of the Islamic State of Iraq and the Levant (Isis) militants.

Another foreign bank, Citigroup has also moved the head of its Baghdad-based representative office, Dennis Flannery to Amman, Jordan, while advising its multinational corporate customers to reduce the amount of cash they keep in Iraq to a minimum.

In addition, HSBC has suspended its correspondent banking relationship with the Iraqi lender, Dar Es Salaam Investment Bank, in which it owns a 70% stake.

HSBC had planned to divest its stake in Dar Es Salaam Investment Bank last year, but the sale was delayed due to a technical problem in transfer of the Baghdad-listed shares, according to person with the knowledge of matter.

However, financiers insist that foreign lenders continue to operate and service their big multinational corporate clients in Mosul and other places that are under Isis control.

The bankers told last month that they were preparing for the worst situation after Isis militants stole about $450m of cash and gold from Mosul’s central bank and other banks in the northern Iraqi city, according to the news agency.